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Malaysia Airlines' Two Crashes Pose Barrier To Survival, History Shows

After two fatal crashes in five months, Malaysia Airlines faces a high barrier to continued operations, because history shows that the combination of crashes and financial difficulties has repeatedly contributed to carriers’ demise.

Aviation consultant Bob Mann said Malaysia Airlines’ continued existence was already threatened by poor financial results, particularly following the March 8 disappearance of Malaysia Flight 370. The crash of Flight 17, shot down over Ukraine on Thursday, “is not going to help,” he said.

Although Malaysia Airlines is highly regarded for its service levels, “there’s a big distinction between service quality and technical merit, on the one hand, and being financially solvent enough to be around,” Mann said.

However, Mann noted that carriers can “make it back through serial adversities and setbacks, but they must openly and transparently address key issues

“Malaysia appears to have learned lessons from its halting slowness to react to the Flight 370 tragedy and is already applying those lessons to their handling of what by all accounts is the Flight 17 crime,” he said.

Parent company Malaysian Airline System lost $140 million in the first quarter of 2014 and also lost money in each of the three previous years.

George Hamlin, an aviation consultant and historian, said the Malaysian government, which owns 69% of Malaysia Airlines, will likely seek to ensure that the carrier continues to operate.

“This is Malaysia’s flag carrier,” Hamlin said. “You have instances, Alitalia among them, where for reasons of national pride there is a desire to keep the flag carrier intact, even though economics would dictate otherwise.”

Hamlin recalled that on May 12, 1959, Washington-based Capital Airlines suffered two fatal crashes in one day.

In one, a Lockheed Constellation skidded off a wet runway, killing two people, in Charleston, W.Va. In the other, a Vickers Viscount broke up in mid-air after encountering turbulence, killing 31 when the plane crashed in ChaseChase, Md., according to Wikipedia.

In fact, Capital had five crashes in two and a half years from April 1958 through January 1960. Already financial troubled, it merged into United in 1961, a merger between two of the five biggest airlines. The merger was an example of a policy, when airlines were regulated, of encouraging failing carriers to merge with successful ones, Hamlin said.

Mann said the crash of Flight 17, as the result of being struck by a missle, bears a resemblance to the loss of Pan Am Flight 103 to a terrorist bomb. Neither incident was viewed as the airline’s fault. But Pam Am – like Malaysia – already faced financial difficulties. Pan Am “went on for a few more years, kind of bumbling along,” he said.

By the time Flight 103 crashed at Lockerbie, Scotland, “Pam Am had spent the better part of two decades dying,” Hamlin said. “It had kept itself alive for many years by selling off the family jewels, such as its Pacific routes. Many people realized that when the bomb went off, Pan Am was a victim, not the only carrier this could have happened to, and I don’t think there were massive (lost bookings.) But Pan Am probably would have died anyway.”

In the cases of crashes at Air Florida and ValuJet, the carriers’ demises were more clearly hastened by fatal crashes. Both were startup low-fare carriers without long histories of successful operations. After Air Florida Flight 90 crashed into the Potomac River at Washington National Airport in 1982, the National Transportation Safety Board determined that pilot error caused the crash.

“Air Florida demonstrated something less than technical excellence,” Hamlin said. “That is frightening to passengers.” Air Florida shut down in 1984.

In the case of the 1996 ValuJet crash in the Everglades, the NTSB blamed three parties: the airline, the Federal Aviation Administration, and contractor SabreTech. The three had all played roles in devising or enabling a maintenance system that relied too heavily on outsourcing. After the crash, many potential customers were scared off, even as the FAA forced ValuJet to shrink.

Subsequently, ValuJet was rebranded as AirTran. In 2010 Southwest acquired AirTran and began to work on the slowest airline merger in history.

An exception to the pattern was USAir, which suffered five crashes between 1989 and 1994 yet continued to operate.

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